Today, more and more people are relying on gifted funds to buy their homes. However, this doesn't mean that everyone who has received gifted funds can actually use them to buy a house. There's a lot to know and understand with gifted money, especially when it comes to conveyancing. That's because problems can occur in the process of using the money, and even when getting the money, that may affect the aspects of the conveyancing process.
That being said, if you are considering purchasing a property with gifted money, there are a few things you should know about the conveyancing process.
What Is Conveyancing?
Conveyancing is the legal process of transferring ownership of property from one person to another. In the case of gifted money, conveyancing typically refers to the act of gifting money to another person for the purpose of purchasing a property.
What Are the Benefits of Conveyancing with Gifted Money?
There are several benefits to conveyancing with gifted money:
1. You Can Buy the Property You Actually Want
You may have found the property of your dreams, yet you don’t have enough means to buy it. If that’s the case, gifted money can raise your funds, allowing you to afford the property. This means you don’t have to settle for a lower-priced property just because you don’t have enough money for it.
2. Reduce Interest Rates
If you're able to put down a larger deposit thanks to the gifted money, you may be able to reduce the interest rate on your mortgage if you have one. This can save you a lot of money in the long run, which can be used for other things.
3. You Won't Have to Worry about Saving up as Much Money Yourself
Saving money isn't only hard, but it is incredibly time-consuming, especially if you are trying to save a large sum of cash. With gifted money, you can skip a lot of that saving time, meaning that you can get to purchasing properties much earlier! In fact, you might even be able to afford properties that are a little pricier as a result.
4. Get Help from Family and Friends
Using gifted money can help you buy your dream home sooner than you could on your own. It can also give you the peace of mind of knowing that you have the support of your family and friends and that they give you the green light to buy the property.
What Are the Risks of Conveyancing with Gifted Money?
If you are buying a property with gifted money, there are a few extra risks that you need to be aware of.
1. May Not Be Enough
The first risk is that the gifted money may not be enough to cover the full purchase price of the property. This means that you will need to find another source of funding to make up the difference.
2. May Not Be Available Right Away
The second risk is that the gifted money may not be available to you immediately. This means that you may have to wait for the money to be transferred into your account before you can complete the purchase.
3. The Gift Giver May Change Their Mind
The third risk is that the person who has gifted you the money may change their mind and ask for the money back. This could leave you in a difficult financial situation.
If you are considering using gifted money to buy a property, it is important that you are aware of the risks involved. You should speak to a conveyancing solicitor to find out more about the process and to make sure that you are fully prepared before you start.
Are There Any Issues I Have to Be Aware of When Conveyancing with Gifted Money?
If you are planning on purchasing a property with gifted money, there are a few things you need to be aware of in order to avoid any potential issues.
It's Not the Same as a Loan. First and foremost, it is important to know that gifted money is not the same as a loan. Gifted money is given to you as a gift, with no expectation of being repaid. A loan, on the other hand, is money that you will be expected to repay with interest.
Because of this, it is important to make sure that any gifted money you receive is clearly marked as such. This will help to avoid any confusion or misunderstandings down the road.
Improper Documentation or Incomplete Details. Additionally, you will need to make sure that the gifted money is properly documented. This includes getting a signed and dated gift letter from the person or persons who are giving you the money. The gift letter should state the amount of money being gifted, as well as the relationship between the parties involved.
Source of the Gifted Money. Finally, If you are thinking of buying a property, it is important to understand where the money for your conveyancing fees comes from. Why? Problems can arise if that money is a result of illegal activities. Otherwise, this can leave you in a serious predicament that can prove costly.
Tax Implications. Also, it is important to keep in mind that gifted money may have tax implications. Be sure to speak with a tax professional to determine if there are any taxes owed on the gifted money.
If you take the time to do your research and plan ahead, there is no reason why purchasing a property with gifted money should be any more complicated than any other type of purchase. Just be sure to take the necessary precautions to avoid any potential issues.
What Should I Do If I Have Any Questions about Conveyancing with Gifted Money?
If you have any questions about conveyancing with gifted money, the best thing to do is to speak to a solicitor. They will be able to provide you with all the information you need and answer any questions you have.
All in all, conveyancing with gifted money is great for so many reasons. Not only is it a great way to access a huge amount of money to buy the property of your dream, but you also can save money in the process. However, there are many issues that can arise from using gifted money, one of them being the source of the money. As such, throughout the process, we highly recommend that you hire a professional to assist you in properly conveyancing with gifted money. Also, they will help you uncover any issues that you may have yet to run into, dealing with them early on and ensuring that you have the money you need to finally purchase the property you want.
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